Market Commentary
Market Commentary: Discipline
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August 2, 2022

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Bitcoin and ether gained 27.1% and 70.3% just in the month of July, benefitting those that practiced discipline and maintained conviction through tumultuous times.

Key Takeaways:

  • Bitcoin and ether post their best months since October and January 2021, respectively, gaining 27.1% and 70.3% in the 31 days of July
  • Whether we’ve entered a “recession” or not, markets rallied after last week’s FOMC and GDP reports;  expectations for peak policy rates continue to decline, supporting renewed risk-appetite for investors
  • Crypto’s bounce illustrates the importance of maintaining conviction as ether rallies above the June 12th breakdown point, the day in which Celsius paused withdrawals
  • It’s easier to blame the Fed than it is to maintain conviction, but that does nothing for long-term investors


Bitcoin, ether, and digital assets experienced another week of positive gains, supported by the continuation of renewed risk appetite since the alleviation of macro stress factors beginning in mid-June.

In the month of July, bitcoin rallied 27.1%, the best since October 2021, while ether rallied 70.3%, the best since January of the same year.

This comes as the market took in stride last week’s July FOMC meeting and Q2 GDP report. While Chair Powell raised the expected 75 basis points, the Chairman had a touch of dovishness in his tone through the Q&A session and markets rallied into the close (S&P 500, Nasdaq Composite, bitcoin, and ether gained 2.6%, 4.1%, 8.6%, and 16.0% just on Wednesday).

Despite a second quarter of negative GDP growth leading to what some call “technical recession,” the market rallied yet again on Thursday: the S&P 500, Nasdaq Composite, bitcoin, and ether gained 1.2%, 1.1%, 5.5%, and 9.8%, respectively.

While some bears are now held up with the true definition of a recession, some traders and investors have taken note of the  writing on the wall: since the highs in yields, breakevens, and commodities in mid-June,

  • Policy expectations have declined from 3.9% to now 3.3% by the February 2023 meeting
  • The S&P 500 has rallied 12.6% while the Nasdaq Composite has rallied 16.4% (symbolizing renewed growth & technology outperformance since equity lows on June 16th)
  • And most importantly, bitcoin and ether have outperformed.

So, what’s the takeaway? The importance of maintaining conviction. As long-term investors, we know that markets have tested the strength of investor discipline many times over many decades. Each time, investors find themselves with “more pain than gain” when selling after large declines and drawdowns.

This most recent crypto rally has brought ether above the levels seen prior to the Celsius news on June 12th, and all those that have panic sold since, are now “down on the trade.” Amidst such pessimism, the Nasdaq Composite has even retraced nearly all losses since the May 4th FOMC meeting.

On June 21st, our commentary titled “Riptides” highlighted three things: 1) bitcoin experiences a median 107% rally from intra-year lows, 2) bitcoin was historically cheap when considering its distance from the 200D moving average, and 3) bitcoin was below fair value, with an MVRV multiple of less than 1. But many investors hesitated to invest or add to their positions when the opportunity arose, with a slight loss of conviction due to price.

This bounce from the lows is certainly painful for all of those that expected (or in some cases, wanted) lower prices. The good news is that while bitcoin and ether have rallied 33.9% and 90.6% from their lows placed on June 18th, opportunities remain for long-term investors with price significantly off all-time-highs (-64.9% for bitcoin, -64.1% for ether). As we know, markets rarely, if ever, provide an “all-clear signal.”

The burden is now back on the bears, who must prove that July was a bear-market rally. For another macro roll-over to occur, the group of pessimists must bet that the Fed has failed (a claim that has been made many times over many decades without avail); inflation will stay (despite underlying indications of deceleration); the bear market has not been long or deep enough (nine months so far for crypto, growth, and technology, with a 33.7% peak to trough decline for the Nasdaq); and ultimately, a drawn-out recession will push market prices down for another leg lower.

As long-term investors with three plus year horizons, that’s not a bet we’d like to make, especially in the face of the strength seen since the mid-June (particularly June 14th) macro “turn.”

Of course, it’s easier to blame the Fed than it is to maintain conviction – but that does nothing for long-term investors.


After three straight months of declines, bitcoin and ether posted their best performance in months – reassuring investors of their ability to bounce when conditions warrant.

Despite calls for a “crypto winter,” bitcoin rallied 27.1% while ether gained 70.3%, illustrating that the asset class is “down” but certainly “not out.”

This is the best month since October of 2021 for bitcoin and January of 2021 for ether and directly follows the bankruptcies of several centralized lending institutions.

While practicing patience and maintaining discipline is key when investing in all asset classes, it’s particularly true for digital assets, which face increased scrutiny through tumultuous times.

Knowing what you own, why you own it, and how it’s expected to perform helps investors maintain conviction in the most difficult of market environments.

For our commentary around the lows in June, see “Questions” dated June 14th, “Riptides” dated June 21st, and “Moving Along” dated June 28th.


As we discussed on page one, bitcoin and ether’s bounce remains incredibly strong since the lows on June 18th.

This rally, led by Ethereum’s news of a tentative September 19th Merge date, has now brought ether’s prices above the level they were when the Celsius news hit on June 12th.

Those that panic sold are now “down on the trade” with ether up 13.1% from June 11th, and 90.6% from the lows placed on June 18th. While bitcoin is down 16.1% from pre-Celsius levels, it’s bounced 33.9% from the lows.

Bitcoin and ether’s resilience should not go unnoticed; the asset class has weathered not only an incredible macro storm, but now significant idiosyncratic events as well.

Click here to download full report. As always, please reach out with any questions or comments.

Stay tuned,

Joseph Orsini, CFA
Vice President of Research

Investment advisory and management services are provided by Eaglebrook Advisors, Inc., a registered investment advisor. Information presented is for educational purposes only. Past performance is no indication of future results. Please see our Form ADV Disclosures and Privacy Policy in our website.
Price Volatility of Digital Assets – A principal risk in trading Digital Assets is the rapid fluctuation of market price. High price volatility undermines Digital Assets’ role as a medium of exchange as consumers or retailers are much less likely to accept them as a form of payment. The value of client portfolios relates in part to the value of the Digital Assets held in the client portfolio and fluctuations in the price of Digital Assets could adversely affect the value of a client’s portfolio. There is no guarantee that a client will be able to achieve a better than average market price for Digital Assets or will purchase Digital Assets at the most favorable price available. The price of Digital Assets achieved by a client may be affected generally by a wide variety of complex and difficult to predict factors such as Digital Asset supply and demand; rewards and transaction fees for the recording of transactions on the blockchain; availability and access to Digital Asset service providers (such as payment processors), exchanges, miners or other Digital Asset users and market participants; perceived or actual Digital Asset network or Digital Asset security vulnerability; inflation levels; fiscal policy; interest rates; and political, natural and economic events.
Digital Asset Service Providers – Several companies and financial institutions provide services related to the buying, selling, payment processing and storing of virtual currency (i.e., banks, accountants, exchanges, digital wallet providers, and payment processors). However, there is no assurance that the virtual currency market, or the service providers necessary to accommodate it, will continue to support Digital Assets, continue in existence or grow. Further, there is no assurance that the availability of and access to virtual currency service providers will not be negatively affected by government regulation or supply and demand of Digital Assets. Accordingly, companies or financial institutions that currently support virtual currency may not do so in the future.
Custody of Digital Assets – Under the Advisers Act, SEC registered investment advisers are required to hold securities with “qualified custodians,” among other requirements. Certain Digital Assets may be deemed to be securities. Currently, many of the companies providing Digital Assets custodial services fall outside of the SEC’s definition of “qualified custodian”, and many long-standing, prominent qualified custodians do not provide custodial services for Digital Assets or otherwise provide such services only with respect to a limited number of actively traded Digital Assets. Accordingly, clients may use non- qualified custodians to hold all or a portion of their Digital Assets.
Government Oversight of Digital Assets – The regulatory schemes—both foreign and domestic—possibly affecting Digital Assets or a Digital Asset network may not be fully developed and subject to change. It is possible that any jurisdiction may, in the near or distant future, adopt laws, regulations, policies or rules directly or indirectly affecting a Digital Asset network, generally, or restricting the right to acquire, own, hold, sell, convert, trade, or use Digital Assets, or to exchange Digital Assets for either fiat currency or other virtual currency. It is also possible that government authorities may take direct or indirect investigative or prosecutorial action related to, among other things, the use, ownership or transfer of Digital Assets, resulting in a change to its value or to the development of a Digital Asset.

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